The G-10 rundown
USD – the US dollar continues to come out on top as the US yield curve – and curves globally – bear steepen. There is the added uncertainty of the US-China trade deal status that could further boost the USD if Trump comes out hawkish on China today.
EUR – euro may outperform against riskier currencies if complacency yields to more concern, but specific EU-positive catalysts needed to spark an isolated rally.
JPY – USDJPY pushing on resistance once again, but the massive rise in longer Japanese yields keeping the JPY from feeling the pressure one would normally expect as yields rise.
GBP – sterling catching a strong intraday bid yesterday on the news that the Brexit party’s Farage will not run candidates in Tory districts, but that bid has faded a bit as odds are still touch and go on whether Boris Johnson can realize a majority.
CHF – the franc marching to the beat of its own drummer – possibly as the euro has taken over as a preferred funding currency for carry trades, which could mean upside down behavior from historic patterns over risk off events – but too early to tell. In defense of the resilient CHF here – 10-year Swiss government bonds now yield -38 bps vs. -112 bps at the lows!
AUD – the Aussie looking vulnerable and could get very much more so on the perfect storm of a belligerent Trump on trade (not our call, but a risk), and any mishap in the upcoming data – particularly Thursday’s employment data .
CAD – USDCAD progressing higher again as the yield spread at the short end of the curve between US and Canada has moved over 15 basis points in the former’s favour. Technically, looks like one of the better pairs for expressing a strong USD view, particularly if Trump breaks
NZD – a big decision tonight from the RBNZ as the bank’s official cash rate approaches the effective lower bound. A 25-bp move is widely expected, but how the RBNZ spins its decision and guidance will carry more weight. Generally inclined to believe that Orr defaults to the dovish side - but not much more policy room to work with. Yet another signal that CB's handing over the reins to the government?
SEK – EURSEK in limbo here after the obvious 10.60 support area was tested but not broken. In general, stronger risk appetite and positive economic news both at home and abroad are needed to rekindle SEK upside. Riksbank has done its part by signaling the move away from the negative yield era.
NOK – the EURNOK sell-off taken right to the top of the pivotal 10.05-00 zone as we await further developments.
Today’s Economic Calendar Highlights (all times GMT)
- 0930 – UK Oct. Jobless Claims Change
- 0930 – UK Sep. Average Weekly Earnings
- 0930 – UK Sep. Unemployment Rate
- 1000 – Germany Nov. ZEW Survey
- 1030 – US Fed’s Clarida (Voter) to Speak
- 1700(?) US President Trump to Speak
- 2330 – Australia Nov. Westpac Consumer Confidence
- 0030 – Australia Q3 Wage Price Index
- 0100 – New Zealand RBNZ Official Cash Rate
- 0200 – New Zealand RBNZ Governor Orr Presser